China Controls Bitcoin, Could Turn Crypto to Next 5G Race – Insiders Say
From a top government official discussing cryptocurrency regulation during a US House of Representative Committee on Financial Services hearing on Nov. 12 to Ripple CEO, the narrative that China controls the world’s top cryptocurrency, Bitcoin, is back in the news.
Brian Brooks, who had been the acting chief of the Office of the Comptroller of Currency (OCC) since May until this week when President Donald Trump announced the intention to nominate Brooks to a full five-year term as the head of the federal bank regulator, said in the hearing that China has “captured more than 51% of the mining capacity on the Bitcoin blockchain which means that the very first internet of money which was the Bitcoin blockchain about 10 years ago is now esentially owned by China.”
As a result, he says the US is now faced with “a geo-strategic competitiveness issue” which borders around whether the US wants to “own Internet 2.0 in the same way that we owned Internet 1.0?”
— Josh Olszewicz (@CarpeNoctom) November 17, 2020
The chief’s shared view is not entirely new as the claim has been made on several fronts – including earlier this year when a University of Cambridge Bitcoin Electricity Consumption Index shows through a map that China accounts for 65% of the world’s hash power which is used to measure the power of computers linked to the Bitcoin network. However, he is the latest key figure in the US government in an office involved in a crypto-related activity to make such an assertion in recent times.
Cryptocurrency custody a modern bank activity
In his written testimony before the lawmakers, Brooks referenced the two actions that his office has taken this year in response to specific industry questions about cryptocurrencies, distributed ledger technology (DLT) and stablecoin activity as already being conducted or considered by banks it oversees.
“Our actions have clarified authority and regulatory expectations for banks in ways that reduce the overall risk to the banking system and support its continuous evolution and innovation,” the former Chief Legal Officer of Coinbase digital asset exchange and custodian said, citing their July 22, 2020 publication of an interpretive letter clarifying national banks’ and federal savings associations’ authority to provide cryptocurrency custody services for customers.
The second interpretive letter published on September 21 clarified bank’s authority to hold reserves on behalf of customers who issue certain stablecoins. He said the letter responded to “questions from the industry and concluded that banks may hold “reserves” on behalf of customers who issue stablecoins in situations where the coins are purchased by customers through hosted wallets.”
Ripple’s CEO worries sabout crypto in China
Following in Brook’s step is Ripple’s Brad Garlinghouse who believes that Bitcoin’s current rallying will be around for a while and would likely continue due to various macro factors including stimulus packages and inflation. He tells Bloomberg in an interview that he worries more than 50% of Bitcoin mining is in China, and China can control the technology.
“I think we in the US really need to get in sync with other major economies across the world on how we look at an asset like XRP and treat it similarly,” he said. “I think the Chinese Communist Party is very strategic and very focused on dominating the technology. I worry that this would be the next 5G race. We lost that race and I think we in danger of repeating the mistake again in the battle for what I think would be the future of our global financial infrastructure and payment.”